real strategies to reduce tax

Transcription

1 real strategies to reduce tax

2 Our core business is Tax Depreciation a vital tool for any property investor why use us you will save money Real Property Matters first fee is your last. Our comprehensive report covers the property for its depreciation life (40 years) So, once your Tax Depreciation Schedule is completed there s no more to pay. Ever! Making property improvements or upgrades? As an RPM client we ll update your report, online and free of charge So, your report will always be up-to-date and ATO compliant. Real Property Matters guarantees you will. In fact, if you don t save money within the first full financial year of your Tax Depreciation Schedule, our service is free. who we are Real Property Matters are Quantity Surveyors, providing specialised, professional and money saving services to property investors across Australia. Our core business is Tax Depreciation a vital tool for any property investor while our services extend to protective, management strategies across investment portfolios. Driving this is a friendly and dedicated team, fluent in legislative and industry trends that we pass straight onto our clients. If you don t save money within the first full financial year... Our service is free. how we ll help In a nutshell, qualified Quantity Surveyors maximise owners property depreciation claims. Incredibly, up to 80% of property investors are missing thousands of dollars in depreciation deductions. And, that s our goal: more cash in your pocket. A Tax Depreciation Schedule helps property investors pay less tax. How much? While claims after 12 months range from $2,500 to $20,000, our average claim is $ which equates to around $55, over 10 years. And Real Property Matters have evaluated all property types, across the country. real benefits real value

3 what is tax depreciation? Your investment property and all associated plant and equipment, like the apples pictured below, will lose value over time. This is depreciation. A Tax Depreciation Schedule recoups this loss, claiming it as a deduction against your taxable income. Structural Improvements Fixtures and improvements that have been completed to the property post 27 February 1992 also qualify to be valued and depreciated. It includes fixed assets like; Year 1 Year 2 Year 3 $50.00 Claim $30.00 Claim pergola fencing swimming pool paving shed clothesline rain water tank letterbox. Plant & Equipment All plant & equipment items, irrelevant of age, qualify for depreciation. It includes removable assets such as; what can be claimed? The Building Current tax legislation states that residential properties built after July qualify to have the building component (walls, roof, floor etc) valued and the construction cost can be depreciated, per ATO guidelines. range hood oven stove cook top hot water system smoke detectors air conditioner curtains security system floor coverings and window treatments, to name a few. Opening Swimming Pool $39,450 Swimming Pool $986 Year 1 Allowance Hot Water Service $1,690 Hot Water Service $282 Air Conditioning $13,960 Curtains $5,600 Curtains $1,866 Air Conditioning $1,396 Rain Water Tank $2,245 Rain Water Tank $56 Man Cave $212,505 Security System $2,980 Security System $1,192 Man Cave $5,313 Fence $3,170 Gutters $2,950 Gutters $74 Fence $79 Garage Door $2,290 Carpet $3,255 Carpet $651 Garage Door $458 Paving $7,500 real recouping Paving $188

4 how depreciation is calculated Your Tax Depreciation Schedule is calculated through two divisions; Capital Works Allowance and Plant and Equipment. Capital Works Allowance Is the deduction for the building structure and all structural improvements (fixed assets) at the property. The asset s age determines if it qualifies for depreciation. Any qualifying asset will depreciate for a 40 year period at 2.5%... From the day it was constructed. Plant & Equipment Allowance Is the deduction for items that can be removed without damage. Any item, irrelevant of age, qualifies for depreciation. These items depreciate at an accelerated rate from 5% to 40%, between 5 to 20 years. The depreciation life of these items will commence when the property begins producing income (i.e. a tenant started paying rent). Under ATO legislation, our Quantity Surveyor s are qualified to establish a construction cost, when unknown. We will also assess the Plant and Equipment to determine value and expected lifespan. Refer to What can be claimed to understand what section of the legislation the investment property items will fall into. Also stated under ATO legislation is professions such as Accountants, Real Estate Agents, Property Valuers and Financial Advisors are not qualified to establish a construction cost when it is unknown. real deductions

5 Your schedule could get you closer to your dream holiday! registered & accredited schedules Real Property Matters is a registered Tax Agent company, accredited by the ATO to provide Tax Depreciation Schedules. You ll receive a 40 year report, covering the entire depreciation life of your investment property, including 3 options for depreciation; Prime Cost Diminishing Value Diminishing Value with Low Value Pooling difference a depreciation claim makes A Tax Depreciation Schedule not only reduces taxable income, your schedule fee is tax deductible too. Here s the difference tax depreciation can make, in 12 months; Investor WITHOUT TAX Depreciation Investor WITH TAX Depreciation Schedule Property Investor s Wage $60,000 Property Investor s Wage $60,000 Rental Income $22,000 Rental Income $22,000 Each option includes a graph allowing you to choose which one suits your financial goals. Plus, availability through a secure, online login gives you, your accountant and financial advisors access to your report, 24/7. Total Income $82,000 Total Income $82,000 Tax Paid on Income $18,287 MINUS-Tax Schedule Fee $ After Tax Income $63,713 MINUS-Average Schedule saving $5,520 Taxable Income $75,855 Remember, with property upgrades and item replacements, we ll update your schedule online free of charge. Tax Paid on Income $16,200 After Tax Income $65,800 While this scenario gives a saving of $ after one year of having the schedule completed, it is only a guide. You should always check your real choices financial situation with your Accountant or Financial Advisor.

6 our five steps to save you money START Draw up your report With the depreciable amount established, we accumulate all valued items for the 40 year depreciation schedule. 3 Look at the property An onsite inspection establishes size, age and the standard of the building. We identify the functional items of the property (e.g. Hot Water Service, Cook Top, and Heating, etc.) and highlight improvements made since construction. 1 4 Meeting your financial requirements We liaise with your Accountant or Financial Advisor to ensure your depreciation schedule is in line with your financial goals. 2 5 Value the items We value all the items identified at the inspection and apply an effective life to establish how much can be claimed for the financial year. Updating your schedule Your original report can be used for 40 years. When items initially valued at the inspection are replaced, or other items are added to the property, we update the schedule, free of charge. real savings

7 realservice Get in touch today to find out how we can help you maximise your returns, and put your investment property at the front of the pack!